RBS 2006 Annual Report Download - page 69
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RBS Group • Annual Report and Accounts 2006
68
Operating and financial review continued
Operating and financial review
Wealth Management
2006 2005
£m £m
Net interest income 500 442
Non-interest income 434 372
Total income 934 814
Direct expenses
– staff costs 299 258
– other 137 133
436 391
Contribution before impairment losses 498 423
Impairment losses 1 13
Contribution 497 410
Allocation of Manufacturing costs 143 138
Operating profit 354 272
Loans and advances to customers – gross 8.8 7.8
Investment management assets – excluding deposits 28.2 25.4
Customer deposits 28.5 25.5
Risk-weighted assets 6.5 6.1
Wealth Management delivered strong growth, with total income
rising by 15% to £934 million. Contribution grew by 21% to
£497 million and operating profit by 30% to £354 million.
Wealth Management’s offering of private banking and
investment services delivered robust organic income growth in
2006. Our continuing investment in Coutts UK, Adam &
Company and our offshore businesses helped us to achieve an
overall increase in client numbers of 5%. Coutts UK
customers rose by 9%. Outside the UK, Coutts International
moved its headquarters to Singapore and was successful in
the Asia-Pacific region in recruiting additional experienced
private bankers. We grew customer numbers in the region by
13% and income by 24%.
Growth in banking volumes contributed to a 13% rise in net
interest income to £500 million. Average loans and advances
to customers rose by 14% and average deposits by 10%, with
net interest margin maintained at close to 2005 levels.
Non-interest income grew by 17% to £434 million, reflecting
higher investment management fees and performance fees, as
well as strong growth in new business volumes, particularly in
the UK. Assets under management rose by 11%, to £28.2 billion
at the year-end.
Total expenses rose by 9% to £579 million. In a highly
competitive recruitment market, headcount was successfully
increased by 7%, reflecting our continued investment in the UK
and further expansion in Asia.
Impairment losses returned to historic levels, following a
number of specific items in prior years.